State losing millions to offshore tax havens

Ken Dixon

Updated 9:19 pm, Tuesday, February 5, 2013

HARTFORD -- Major corporations based in Connecticut are using offshore subsidiaries in Hong Kong, the Cayman Islands and elsewhere to avoid paying the state more than $900 million a year in taxes, a nonprofit consumer watchdog said Tuesday.

"Eighty-three out of the top 100 publicly traded companies in the United States use offshore tax havens to ship profits that they legitimately make here in the United States to tax havens to avoid paying taxes," Scarr said.

He said Congress has a couple of related bills in the works. One piece of legislation would increase taxes on the corporations by closing the loopholes.

State Comptroller Kevin Lembo favors legislation that would force the businesses to include their subsidiaries. Similar legislation is already in force in 24 states and the District of Columbia, Scarr said.

"I'd say $904 million in annual lost revenue is a pretty big problem," Scarr said, adding an estimated $2 billion deficit is part of the two-year state budget scheduled to start on July 1.

"This is money that the state could use," Scarr said in an interview. "When large corporations and wealthy individuals don't pay their taxes that means the public suffers, whether it's cuts to public programs or higher debt or higher taxes. Because these large corporations are avoiding paying taxes on both the federal and state level, taxpayers are paying for it twice."

The report says that Aetna uses eight tax havens, including four in the Bahamas; GE has seven tax havens, including three in Bermuda and three in Singapore; Hartford Financial Services has 10, including seven in Bermuda and three in Ireland; The Travelers uses six, including four in Bermuda; and United Technologies has a dozen, including four in Luxemburg and four in Singapore.

Bermuda is the most-popular tax haven, with 14 subsidiaries from the five corporations.

A spokesman at GE headquarters in Fairfield said Tuesday that company officials had not yet reviewed the ConnPIRG report. A request for comment from UTC's offices in East Hartford was not returned Tuesday afternoon.